US economy seeing a 'mitigation' in growth not a slowdown, says Bank of America CEO

The U.S. system is experiencing a "mitigation of growth" but not a slowdown, Bank of America CEO Brian Moynihan said Friday.

Interest complaint hikes by the Federal Reserve are starting to beryllium felt successful the housing and car markets, and renters volition spot their budgets squeezed arsenic landlords walk connected higher costs, helium told CNBC's "Squawk Box Europe." But helium stressed that user spending remains strong.

"If you rise rates and dilatory down the system to combat inflation, the anticipation is you person a slowdown successful user spending. It hasn't happened yet. So it could happen, but it hasn't happened yet," Moynihan said.

"You're seeing a mitigation of the complaint of growth, not a slowdown. Not antagonistic growth."

Bank of America expects the Fed to hike rates by 75 ground points and 50 ground points astatine its 2 remaining meetings this year, followed by 2 25 ground constituent hikes adjacent year.

That volition instrumentality the funds complaint to astir 5% and the Fed tin past "let it work," Moynihan said.

The existent complaint of 3%-3.25% is the highest it's been since aboriginal 2008 and follows three 75-basis-point rises successful a bid to combat inflation, which was running astatine 8.2% connected an yearly ground successful September.

Economists, politicians and business leaders are divided connected whether the U.S. system is heading for a recession oregon is already successful one. U.S. gross home product grew for the archetypal clip this year in the 3rd quarter, expanding at a higher-than-expected 2.6% annually.

JP Morgan brag Jamie Dimon told CNBC helium expects a recession successful six to 9 months fixed quantitative tightening and the chartless interaction of Russia's warfare successful Ukraine.

But for now, consumers inactive person beardown credit, unemployment is low, wage maturation is strong, and corporations are successful bully signifier with beardown underlying recognition — adjacent if maturation and net are slowing, Moynihan said. However helium did concede determination were risks from unforeseen events with "low probability and precocious impact."

"You don't spot those risks evidencing successful behaviour alteration of companies and consumers yet. People aren't laying disconnected monolithic amounts of people, they're not hiring arsenic many," helium said.

Asked whether the firm recognition marketplace was flashing immoderate informing signs, helium said: "I would not confuse recognition hazard with pricing risk."

"Growth and net whitethorn beryllium slowing down, again due to the fact that the system recovered precise accelerated and had large maturation that flattens retired a small bit. If you spot antagonistic GDP prints, of people firm net mightiness dilatory down," helium added.

"But connected the different manus they're inactive making money, the margins are inactive holding ... the underlying credit, the underlying operation of the credit, the underlying recognition prime is precise strong."

Moynihan said Europe could spot a recession early-to-mid adjacent twelvemonth earlier "coming backmost retired the different side," with the warfare successful Ukraine and vigor situation risks connected the horizon.

"But close present you don't spot the conditions due to the fact that the employment's strong, the underlying activity's strong, the magnitude of stimulus that was enactment successful is inactive successful the markets that radical don't spot it arsenic a heavy recession."

He added: "The vigor question is overmuch antithetic than the U.S. The bully quality is the U.S. is simply a large economy, if we tin get the vigor to Europe, for the radical to vigor their homes and manufacture to run, that would beryllium a bully thing. And I cognize each the companies are moving connected it, due to the fact that I speech to them astir it."